Municipalities owe Eskom R46.1 billion as Gordhan lists worst offenders

Minister of Public Enterprises Pravin Gordhan says that the total debt owed by municipalities to Eskom as at 31 July is R46.1 billion – of which R31 billion is overdue debt.

Responding to a written parliamentary Q&A this week, Gordhan said that Eskom has implemented several interventions to collect the outstanding debt including:

  • increasing the payment days from 15 to 30 days for all non-metropolitan municipalities, reduced the interest rate on arrears, and applies payments to capital first before interest;
  • Offering payment plans as a means to make the payment of the arrear debt more affordable over a period of time;
  • Direct engagement with defaulting municipalities, issuing contract breach notices with the intention of encouraging a remedy of the breach, interruption of supply, and also litigating by issuing summons for payment;
  • Legal pursuance of debt which also extends to the attachment of assets and bank accounts of certain municipalities.

A week ago Eskom published its results for the financial year ended March 2020, showing a net loss after tax of R20.5 billion, despite revenue of R200 billion.

Eskom cited significant operational and financial challenges – resulting in Stage 6 load shedding during December 2019, and further financial assistance from the government. The declining energy availability factor resulted in 46 days of load shedding.

Municipal arrear debt increased to R28 billion in March 2020, from R19.9 billion in March 2019. Soweto, which has long been chastised for failing to pay Eskom, saw its payment rates increase to 22%, from the very low base of 12%.

“We have implemented assertive collection strategies against the largest municipal defaulters, which has resulted in a 17% increase in payment levels from these customers during FY21. This is one of the key areas that require a concerted effort if Eskom is to embark on a sustainable course,” said Eskom chief executive officer, Andre De Ruyter.

“Every consumer of electricity needs to pay for what they consume,” he said.

The total debt owed by each municipality to Eskom, as at 31 July 2020, is outlined by Gordhan in the document below.

Read: Move to clean energy may threaten over 120,000 jobs in South Africa: economists

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Municipalities owe Eskom R46.1 billion as Gordhan lists worst offenders